Test Bank The Economics Of Education Ch.17

c17; Chapter 17: The Economics of Education

Learning Objectives:

1. Describe the level and changes in educational attainment over time
2. Describe the costs and benefits of education
3. Define human capital
4. Model the positive externalities associated with education
5. Evaluate why some education is publicly provided
6. Describe some of the issues surrounding education reform

Multiple Choice

1. In 1948 the highest level of educational attainment of the U.S. population was
   1. not a high school graduate.
   2. high school graduate.
   3. some college.
   4. four or more years of college.

LO-1

Level: Easy

1. In 2008 the highest level of educational attainment of the U.S. population was
   1. not a high school graduate.
   2. high school graduate.
   3. some college.
   4. four or more years of college.

LO-1

Level: Easy

1. Which of the following is included in the cost of education?
   1. Direct costs such as books
   2. Opportunity costs
   3. Time
   4. Direct costs and opportunity costs

LO-2

Level: Easy

1. Jacob attends Greatland University. He is a full time student. Annually he pays $6,000 in tuition and fees, $8,000 for room and board, and $1,300 for books. He also estimates that because he has chosen to be a full time student he is giving up approximately $20,000 in income. He also gives up approximately $600 in interest to finance his education. Jacob’s annual total cost of his education is
   1. $14,000.
   2. $15,300.
   3. $35,300.
   4. $35,900.

LO-2

Level: Difficult

1. The largest cost of attending college is
   1. tuition.
   2. tuition and books.
   3. room and board.
   4. foregone costs.

LO-2

Level: Easy

1. The opportunity cost of education
   1. increases with the level of educational attainment.
   2. decreases with the level of educational attainment.
   3. is consistent with the level of educational attainment.
   4. does not appear to be related to the level of educational attainment.

LO-2

Level: Moderate

1. Which of the following statements is true concerning marginal benefit and marginal cost of education?
   1. The marginal private benefit is less than the marginal private costs for the first few years of education.
   2. The marginal private benefit is equal to the marginal private costs for the first few years of education.
   3. The marginal private benefit is greater than the marginal private costs for the first few years of education.
   4. The marginal social benefit is greater than the marginal private costs for the first few years of education.

LO-2

Level: Difficult

1. As years of education is increased
   1. marginal benefit will increase.
   2. marginal benefit will decrease.
   3. marginal cost will decrease.
   4. marginal cost will remain constant.

LO-2

Level: Easy

1. As years of education is increased
   1. marginal benefit will increase.
   2. marginal benefit will decrease.
   3. marginal cost will increase.
   4. marginal cost will remain constant.

LO-2

Level: Easy

1. The acquired skills and knowledge that make people more productive is
   1. brain capital.
   2. human labor.
   3. human capital.
   4. physical capital.

LO-3

Level: Easy

1. Which of the following statements is most accurate?
   1. Because of the increase in skills and knowledge demand for workers decrease due to costs.
   2. Because of the increase in skills and knowledge demand for workers decrease due to productivity.
   3. Because of the increase in skills and knowledge demand for workers increase due to costs.
   4. Because of the increase in skills and knowledge demand for workers increase due to productivity.

LO-3

Level: Moderate

1. Which of the following statements is true concerning marginal benefit and marginal cost of education?
   1. The marginal private benefit is less than the marginal private costs for the 16th year of education.
   2. The marginal private benefit is equal to the marginal private costs for the16th year of education.
   3. The marginal private benefit is greater than the marginal private costs for the 16th year of education.
   4. The marginal social benefit is greater than the marginal private costs for the 16th year of education.

LO-2

Level: Difficult

1. When I benefit because you increase your education a ________________ exists in society.
   1. positive externality
   2. negative externality
   3. positive private cost
   4. positive private benefit

LO-4

Level: Easy

1. ____________________ are benefits received by third parties.
   1. Positive externalities
   2. Negative externalities
   3. Positive private costs
   4. Positive private benefits

LO-4

Level: Easy

1. _________________ are costs imposed on third parties.
   1. Positive externalities
   2. Negative externalities
   3. Positive private costs
   4. Positive private benefits

LO-4

Level: Easy

1. Because of education society experiences a
   1. positive private cost.
   2. positive private benefit.
   3. positive externality.
   4. negative externality.

LO-4

Level: Easy

1. When a positive externality is present in an industry
   1. resources are overallocated.
   2. resources are underallocated.
   3. resources are efficiently allocated.
   4. there is insufficient information to determine.

LO-4

Level: Moderate

1. Which of the following would be a result of a positive externality?
   1. Increased dependence on social welfare programs
   2. More political unrest
   3. Lower crime rates
   4. Lower voter participation rates

LO-4

Level: Easy

1. Because positive externalities present benefits on third parties
   1. private marginal benefits and social marginal benefits need to be considered to determine an optimal level of output.
   2. social marginal benefits and social marginal costs need to be considered to determine an optimal level of output.
   3. private marginal costs and private marginal benefits need to be considered to determine an optimal level of output.
   4. social marginal costs and private marginal benefits need to be considered to determine an optimal level of output.

LO-4

Level: Moderate

1. When a positive externality is present the market will produce
   1. an efficient amount and charge a fair price.
   2. too much product and charge a price greater than a fair market value price.
   3. too little product and charge less than a fair market value price.
   4. too little and charge more than a fair market value price.

LO-4

Level: Moderate

1. Marginal benefits received only by the individual decision maker are
   1. marginal benefits.
   2. private marginal benefits.
   3. social marginal benefits.
   4. external benefits.

LO-4

Level: Easy

1. Consider the graph. Because there are not incentives for people to consider when buying education the market determined amount of education would be
   1. Q*_Private.
   2. Q*_Social.
   3. Point A.
   4. Point B.

LO-4

Level: Moderate

Reference: Use the graph to answer questions 23 and 24.

1. The socially optimal level of education is
   1. Point A.
   2. Point B.
   3. Q*_Private.
   4. Q*_Social.

LO-4

Level: Easy

1. The amount of the positive externality is represented by
   1. The distance between points A and B.
   2. The distance between points B and C.
   3. The distance between points C and A.
   4. The distance between Q*_Private and Q*_Social.

LO-4

Level: Moderate

1. Mathematically the amount of the marginal benefit to society is
   1. external benefits minus private marginal benefits.
   2. private marginal benefits minus external benefits.
   3. private marginal benefits plus external benefits.
   4. (Marginal benefits minus external benefits)².

LO-4

Level: Easy

1. As years of education are increased
   1. external benefits increase.
   2. external benefits decrease.
   3. external benefits remain constant.
   4. the rate of change for external benefits increases after attainment of high school.

LO-4

Level: Easy

1. Spending per student in the U.S. has ______________ over the last 50 years.
   1. grown slowly.
   2. not exhibited any growth.
   3. grown rapidly.
   4. experienced inconsistent rates of growth.

LO-4

Level: Easy

1. Governments allocate large budgets to education at K-12 and university levels because _________________ and to ___________________.
   1. education generates positive externalities for society; increase people’s incentives to obtain more education.
   2. education generates negative externalities for society; increase willingness to pay for education.
   3. resources are overallocated; create more efficiency in the market.
   4. education is a private good; provide easier access to education.

LO-5

Level: Moderate

1. Societies will provide assistance and incentive to encourage people to increase education because
   1. the marginal cost of increasing educational attainment is less than the marginal benefit to society.
   2. the productive efficiency of education is limited to the level of private output.
   3. the optimal private level of educational attainment is lower than the socially optimal level of educational attainment.
   4. the level of external benefits is insufficient to cover the private benefits received.

LO-5

Level: Moderate

1. Educational reform programs place an emphasis on the value of ____________ in providing incentives for teachers and administrators to be as productive as possible with their means.
   1. private businesses.
   2. integration.
   3. competition.
   4. seclusion.

LO-6

Level: Easy

1. An educational reform program that allows parents a choice about where their children attend schools are known as
   1. private schools.
   2. charter schools.
   3. voucher schools.
   4. segregated schools.

LO-6

Level: Easy

1. The U.S. educational system is widely criticized because of
   1. the political debate among administration.
   2. the diversity of students and levels of abilities.
   3. the lack of parental involvement.
   4. the increased spending has not seemed to generate better educational outcomes.

LO-6

Level: Easy

1. Research on school choice reform programs
   1. has been inconsistent in their results.
   2. has found little results that the programs generated systematic academic benefits.
   3. has found improved students’ test scores.
   4. has found increased parental involvement.

LO-6

Level: Easy

1. Economic research indicates that average teacher quality has fallen since the 1970s. Part of this decline can be attributed to
   1. alternative, better paying options available.
   2. selectivity of educational programs limiting entrance.
   3. the falling number of program completions.
   4. economic downturn causing fewer openings.

LO-6

Level: Easy